GCG’s Q2 2020 Food & Beverage Industry Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples and the state of the middle-market M&A environment.
Key findings include the following:
- Q2 2020 saw significant gains in the Food & Beverage (“F&B”) industry and the broader U.S. equity market as equities experienced a strong recovery from the previous quarter’s sharp decline caused by the COVID-19 pandemic. The Food Distribution segment was the strongest performing in Q2 2020 as companies were pushed to meet the increased consumer demand caused by the mandatory lockdowns enforced across the nation. For the 3-year period ending June 30th, 2020, the S&P 500 index was up by 24.2%, recovering most of its Q1 losses. The F&B industry underperformed the broader market with the exception of the Restaurants and Food Retail segments.
- In Q2 2020, the F&B sector saw higher transaction values and a significantly lower number of transactions compared to Q1 2020. There were 259 transactions in Q2 with an average deal value of $72.6 million. Strategic buyers continue to dominate overall deal activity and have sought acquisitions to offset slowing organic growth and to diversify their offerings. In Q2, financial buyers represented under 12% of all M&A activity in the industry.
- The Packaged Foods and Meats category led activity, accounting for over 42% of total F&B transaction volume. Restaurant companies proved to be attractive targets as well, comprising nearly 22% of transaction volume.
- Based on a representative set of publicly traded companies across the F&B industry, public companies in F&B traded at an average multiple of 13.3x EBITDA and 2.6x revenue. Among the sectors disclosed in the report, the strongest trading multiples were observed in the Beverage and Restaurant sectors. The overall industry experienced an increase in EBITDA and revenue multiples of 19% and 13% in Q2 2020 due to the strong recovery from the previous quarter’s decline caused by the onset of COVID-19.
Click here for the full update.